Bitcoin joined the stock market surge on Wednesday after the latest consumer price index (CPI) report signaled a slight easing in inflation, sparking renewed optimism among investors. The cryptocurrency soared over 7% to $66,124.59, marking its strongest performance since March 25. It also surpassed its 50-day moving average for the first time in weeks.
The positive momentum was partly driven by the CPI data, which hinted at a lower-than-expected inflation rate. Analysts like Owen Lau from Oppenheimer suggested that this could increase the chances of a rate cut, which historically has influenced Bitcoin's price movements. Lau emphasized that Bitcoin may continue to trade in a range until a clearer outlook on rate cuts emerges.
According to the latest CPI report, consumer prices rose by 0.3% from March, slightly below expectations but still reflecting a year-over-year increase of 3.4%. Leena ElDeeb, an analyst at 21Shares, interpreted this as a potential trigger for investors to favor risk-on assets like cryptocurrencies, potentially boosting flows into Bitcoin spot ETFs.
ElDeeb noted that while recovery could be gradual due to lingering uncertainties about rate cuts, Bitcoin's unique position as both a risk-on and risk-off asset means it can adapt to changing market conditions. Despite recent market trends, Bitcoin has maintained stability between $60,000 and $70,000 since March.
Looking ahead, analysts expect Bitcoin to remain rangebound without significant catalysts, with a continued focus on broader macroeconomic developments influencing short-term price movements.
In summary, Bitcoin's rally reflects growing optimism among investors following the CPI data, underscoring its resilience and adaptability in response to evolving market dynamics.
